Statistics on employee theft show that employers should be more concerned than ever. According to one US source, 75% of employees admit to having stolen at least once from their employer, costing a company on average 7% of their annual revenue each year. Below are the top 5 strategies to combat employee theft.
1. Do your due diligence when hiring
This may be one of the most important steps you can take to combat employee theft. Screen all potential employees carefully. Look into employment history, call references and run a credit check. Above all, trust your instincts. If you sense someone might pose a risk to your business, don’t give them the benefit of the doubt. Hire someone else you feel comfortable with.
2. Identify & eliminate opportunities to steal
Think of opportunities where staff have unsupervised access to sensitive financial data, cash, or anything of value. Then, brainstorm how you can minimize the risk. For instance, make sure no employee ever opens or closes the store alone or separate co-workers who are friends. Also restrict access to financial records and change your secure company passwords often.
Common employee theft methods include:
- Redirecting company checks to personal accounts and altering entries to cover up the theft
- Under-counting change to customers and keeping the balance
- Seeking reimbursement for non-business related expenses or
- Pocketing inventory or supplies.
3. Conduct ongoing audits & monitor inventory
In addition to having an annual third-party audit, it’s wise to perform random internal audits every few months to spot fraudulent activity early. Your bookkeeper or accountant can help you maintain accurate numbers and flag transactions that appear suspicious.
Consider investing in an automated real-time inventory management system. It’s a good idea to hire an independent party to check your records on a regular basis, too, to catch any discrepancies in your physical inventory and recorded data.
4. Use a smart POS system
Exception-based reporting systems for point of sale transactions are one of the most useful tools to come out in recent years for preventing employee theft. These systems identify potentially fraudulent transactions in real time such as, excessive refunds or voids, allowing business owners to investigate fraud quickly.
5. Invest in security measures
It only makes sense that when staff knows they’re being watched they’re less likely to steal from you. Key areas for video surveillance include storage space for inventory and supplies, offices where financial data is kept and at the cash desk in-store.
Security SOPs also include giving your staff a way to safely and anonymously report suspicious employee activity. Your staff are the eyes and ears of your business, but they may not come forward with incriminating information unless they feel safe doing so.
Although it’s important to do everything you can to eliminate opportunities for staff to steal from you, one of the most effective ways to avoid employee theft is to nurture a positive relationship with your team. It is much harder to steal from people you know. So take the time to interact with your employees, fostering goodwill with the people who work for you. A friendly environment where people care about each other creates an atmosphere where criminal behavior is less likely to take place.
For more tips on how to prevent employee theft or fraud, contact Bennett Thrasher.